Govt rejects two-tier wage system

The federal government has rejected billionaire retailer Gerry Harvey's proposal for a two-tier wage system.

The man behind electronics retail chain Harvey Norman has reportedly called for a two-tier system to allow employers to pay foreign guest workers less than locals, alleviating the labour shortage and keeping manufacturers from moving to Asia.

"The US can draw on a lot of cheap labour from Mexico and South America ... European countries can draw on cheap labour from Eastern Europe," Mr Harvey told News Ltd at the weekend.

"Australia doesn't have cheap labour.

"Many overseas workers would be prepared to move here for a much better life and half the money Australians earn."

He called on both political parties to consider the idea.

ACTU secretary Jeff Lawrence attacked the plan and called on the federal government to state its position, after Labor employment spokeswoman Julia Gillard voiced her disagreement.

"I mean this is a proposal that's designed to create a two-tier wages structure in Australia, which of course can't happen other than by the extension of AWAs," Mr Lawrence said.

A spokeswoman for Immigration and Citizenship Minister Kevin Andrews said the coalition would not move in that direction.

"The coalition have repeatedly ruled out any such proposal as being inappropriate and frankly un-Australian," she said.

"There is no place for a guest worker scheme in Australia, now or into the future."

She said the unions were running a campaign based on "fear and falsehoods".